Mindful that elections are nearing in Tamil Nadu, West Bengal, Kerala, Assam and Pondicherry, Mr Chidambaram avoided facing the wrath of alliance partners as well as Left parties by disregarding Rangarajan committees recommendation to increase prices of petro products including LPG. His compulsions were evident when he virtually issued a passionate plea to Left on subsidies: The issues of subsidies is proving to be a divisive one but it is imperative that we make progress on this front if we are serious about targetting subsidies at the poor and the truly needy.
That public expenditure management was essentially a political rather than a technocratic process was apparent with the significant increases in allocations for the eight flagship programmes of the UPA. Forced by NCMP commitments, allocations to these programmes have been stepped up by over Rs 15,000 crore to cross Rs 50,000 crore.
In addition to boosting social sector spending, Mr Chidambaram also proposed increasing outlay in the farm sector. Governments appeasement policy too was evident when he announced a Rs 1,700 dole to farmers to take care of a part of their interest liability on loans upto Rs 1 lakh. Amounts equal to two percentage points of the borrowers interest liability would be credited to his/her bank by the next month, he said. This was supplemented with another announcement of concessional interest of 7% for short-term loans taken by farmers for Kharif and Rabi crops.
Playing To The Left Gallery
| With polls due in 5 states, the FM wanted to avoid the wrath of UPA partners |
Disregards Rangarajan committees recommendation to increase petro prices
Concessional interest of 7% for short-term loans taken by farmers for Kharif and Rabi crops
20,000 scholarships for students from minority communities
The Budget, however, failed to enthuse the Left, which joined hands with opposition NDA to criticise the government. Essentially unhappy with the UPA leadership for ignoring their suggestions on mobilising resources, they said it was a pro-rich and anti-poor policy document. Former prime minister Atal Bihari Vajpayee said the Budget provisions would lead to spiralling prices and hit the common man hard.
Mr Chidambaram discounted Opposition criticism that the Budget was pro-rich, contending it was aimed at pushing up growth, which was the best anti-dote for poverty.